CEO-Chairmen now in the Minority as Split Role Model Gains Ascendancy

GettyImages-637371164-compressorLarge companies that combine the CEO and chairman roles now count in the minority, marking a new milestone in American corporate governance history that’s been more than a decade in the making.

The potential tipping point comes as companies face increasing investor scrutiny about the independence of boards and executives, possibly fanned by the recent bogus-accounts scandal at Wells Fargo that led to the departure of previous CEO and Chairman John Stumpf.

“Of all Fortune 500 companies, 52% now separate the positions. That’s up from 32% a decade ago.

Of all Fortune 500 companies, 52% now separate the positions, according to a new analysis released this week by Willis Towers Watson. That’s up from 32% a decade ago.

Those still combining the roles often cite the importance of unified leadership and strategic vision, the consultancy said. But for the growing number of companies splitting them, succession priorities and a desire for more independent leadership took precedence.

From a succession perspective, combining the roles could mean companies are left with a out-sized talent drain, should a CEO-chairman suddenly resign.

Indeed, companies that want to keep an outgoing CEO due to their expertise could always consider negotiating a shift to a stand-alone board chair. Thirty-seven percent of current stand-alone chairmen previously served as CEO of the same company, the analysis found.

As recently reported by Chief Executive, research to date hasn’t yet built a solid case for jettisoning the CEO-chairman model, which hasn’t stopped companies such as Amazon and Berkshire Hathaway from flourishing. External pressure for change, however, appears to be building amid rising public distrust of authority figures, stoked by concerns about income inequality, outsourcing and automation.